BASIC DOCUMENTS AND TRANSACTIONS RELATED TO BANK DEPOSITS

• Bank account- represents funds entrusted by a depositor to a bank for safekeeping.
• The three basic types of bank accounts are:

  1. Savings account

  2. Current/Checking account

  3. Time deposit
• Savings Account- It is a bank account that earns modest interest rate and is intended to encourage savings.
• Savings Account- A savings account is normally evidenced by a “passbook”. The passbook shows the depositor’s deposits and withdrawals, the amount of interest earned by the deposit, and the balance of the account.
• Savings Account- The depositor may also opt to receive an automatic teller machine (ATM) card either in lieu of a passbook or together with a passbook.
• Savings Account- Interest on a savings deposit is accrued daily but is reflected on the account at the end of every quarter. The interest is reduced by a 20% withholding tax.
• Savings Account- If the bank account becomes dormant, the bank charges another penalty called “dormancy fee”
• Current/Checking account - It is a bank account wherein the depositor can write checks.
• Current/ Checking Account- A check is an instrument that orders a bank (drawee) to pay the person named on the check or the bearer thereof (payee) a definite amount of money from the drawer’s bank account.
• A current or checking account can be either

  of the following:

  Basic Checking Account

  Interest-Bearing Checking Account
• Basic Checking Account- usually do not pay

  interest;
• Interest-Bearing Checking Account- pays

  interest just like a savings account.
• Instead of a passbook, the depositor in a checking account receives a “check book”.
• The bank issues a “bank statement” to the depositor every month that shows the deposits and withdrawals during the period and the cumulative balance in the depositor’s bank account.
• Time deposit- It refers to an interest-bearing fund maintained at a bank for a fixed period of time.
• Time deposit- It is similar to a savings account but it earns higher interest rate.
• Time Deposit- is denominated in fixed amounts and, normally, cannot be withdrawn until its maturity date.
• Time Deposit- is evidenced by a “Certificate of Time Deposit”.
• Preparation of Checks

  A check is an instrument that orders a bank (drawee) to pay the person named on the check or the bearer thereof (payee) a definite amount of money from the drawer’s bank account.
• Who are the parties in a check?

  Drawer

  Payer

  Drawee
• Drawer– the one writing the check and also the one whose signature appears on the check.
• Payee– the one who is named on the check or the bearer thereof and is entitled to payment from the drawee.
• Drawee– the bank in which the drawer’s bank account is maintained.
• What are the parts of a check?

  Date

  Amount in numbers and amount in words

  Signature
• Label the ff.

  A) cross check

  B) stale

  C) checks

  D) cross check

  E) stale check

  F) cheque

  G) writing two

  H) parallel lines

  I) upper left

  J) cross check

  K) payees account

  L) 6